Global corporate funding in the solar sector reached $22.2 billion across 175 deals in 2025, according to Mercom Capital Group’s 2025 Annual Solar Funding and M&A Report. While overall investment declined, deal activity rose to its highest level in seven years.
The total funding figure—covering venture capital (VC), public market financing and debt financing—fell 16% year-on-year, marking the lowest annual total since 2020. In contrast, the number of deals increased by 11%, reflecting growing investor interest in smaller, more targeted transactions.
Debt financing remained the dominant source of capital, totaling $16.1 billion across 80 deals in 2025, down from $18.8 billion in 2024. This included $3.4 billion in securitisation deals completed through nine transactions.
Global VC and private equity funding declined to $3.5 billion across 75 deals, compared with $4.5 billion the previous year, although deal count increased by 15. Public market financing also dropped, reaching $2.6 billion, its lowest level since 2019, despite an increase in the number of transactions.
Commenting on the findings, Raj Prabhu, CEO of Mercom Capital Group, said the divergence between rising deal counts and falling capital raised signals a shift toward smaller and more selective investments.
“2025 was a year of recalibration for the solar industry, shaped by policy uncertainty, trade and tariff risks, and higher interest rates that weighed on overall funding levels,” Prabhu said. “Greater policy clarity in the second half of the year improved market visibility and encouraged activity in lower-risk, execution-ready deals.”
A key positive trend highlighted in the report was the strength of mergers and acquisitions (M&A). Corporate M&A transactions rose to 96 in 2025, up from 82 in 2024, representing a 17% year-on-year increase. Downstream solar companies led the activity, acquiring 72 firms, followed by manufacturers with nine deals and balance-of-system companies with five.
The report also noted that rising electricity demand, particularly from data centres, continued to support downstream growth and utility-scale solar deployment. Large-scale solar project acquisitions increased by 13%, reaching 246 deals in 2025 compared to 217 in 2024. However, total acquired capacity slipped marginally by 1%, from 37.7 GW in 2024 to 37.4 GW in 2025.
Overall, the findings suggest that while funding levels softened in 2025, investor confidence in the solar sector remained strong, reflected in higher deal volumes and robust M&A activity.
Courtesy PV Magazine
